Carey, David and Harry Tchilinguirian (2000), “Average Effective Tax Rates on Capital, Labor and Consumption,” OECD Working Paper ECO/WKP(2000)31.
Queisser, Monika and Dimitri Vittas (2000), “The Swiss Multi-Pillar Pension System: Triumph of Common Sense?,” World Bank, Policy Research Working Paper No. 2416.
Prepared by Christoph Klingen.
Note that in the run up to demographic aging a funded pension system does not necessarily spell higher aggregate contributions than a PAYG system. Funded systems need to collect sufficient contributions now to finance the future wave of retirees while PAYG systems delay this until the wave actually retires. But this effect is counterbalanced by the effect of interest earnings by funded pension systems on current contributions. No further adjustment is thus necessary to make the relative revenue takes of Switzerland and Germany comparable.
Of course one cannot rule out that Swiss savings are higher than elsewhere for completely unrelated reasons. For example, contributions to the funded pension pillar, which tend to, ceteris paribus, increase domestic savings, are much larger that elsewhere. In 2000 they came to 7 percent of GDP. Although only about half of this amount is mandated by law, the remainder also takes on a quasi-mandatory character as employers typically offer their employees only pension plans that go beyond the legally required minimum.
Note that current proposals to finance relief from double taxation of distributed profits by introduced a capital gain tax on significant equity holdings would not contribute to rebalancing the tax burden away from capital.